Blockchain technology is the core foundational force of cryptocurrency. Even though the term blockchain is well known in the crypto industry, its uses are not limited to cryptocurrency alone. This technical infrastructure uses many applications and is spread throughout many industries. Since different industries and people approach and interact with blockchain technologies in different ways, there are various kinds of blockchain.
This article aims at understanding the kinds of blockchains and how they differ from each other. Before delving into the types of blockchain, it is important to understand the concept of blockchain technology.
Blockchain Technology: An Overview
Blockchain is a distributed database or ledger that records and verifies transactions across a network of computers. Any time of information can be shared on blockchain. Blockchain securely stores the data and information in blocks for future use. A single authority governs traditional databases. Blockchain technology enables peer-to-peer access between users and is not controlled by a single authority or person.
Types Of Blockchain
Public Blockchain
As the name suggests, public blockchains are available to everyone. It is a permission-less and non-restrictive system. Compared to other types of blockchain, public blockchain is the only one that completely embraces the idea of decentralization. In this system, anyone with a computer and a stable internet connection can participate and integrate with the blockchain technologies.
Advantages
- It consists of security tools that detect any threats and protect the network.
- These types of blockchains also allow users to participate anonymously, without having to reveal their name or identity.
Limitations
- The transaction process is much slower due to its large size.
- Public blockchains work on a stable internet and a good hardware infrastructure. This would require high computing power.
Private Blockchain
Private blockchains are the complete opposite of public blockchains. These type of blockchains works in a restricted or permissionless surrounding. As the name suggests, they remain private and are not available to everyone. Only a selected number of members can participate in the blockchain network. It is controlled and governed by a single authority hence there are some restrictions within the blockchain network.
Advantages
- The transaction speed is higher due to its small size and they only require less computing power.
- Private blockchains provide an increased level of privacy for organizations or businesses that prefer to remain anonymous and confidential.
Limitations
- One of the major limitations of a private blockchain is that they are controlled by a single authority that has the power to control all the activities of the blockchain network.
- As they contain only a few number nodes, it makes them slightly more vulnerable to cybersecurity threats and attacks.
Hybrid Blockchain
Hybrid blockchains can be considered as the collaborated version of both public and private blockchains. It contains the elements of both th blockchains. Even though it operates on a private permission-based system the control of the data can be accessed by the public. Not all data are open to the public, others remain stored in the private blockchain. In this type of blockchain network, users can get the benefits of public and private blockchain systems.
Advantages
- This type of blockchain is comparatively less vulnerable to cybersecurity attacks as compared to other types of blockchain networks. The hybrid nature of the blockchain makes it difficult for hackers to gain access.
- Hybrid blockchains are flexible and can be customized according to the needs while maintaining security and transparency.
Limitations
- In some cases, it becomes difficult to manage a hybrid blockchain. Not every organization can efficiently make a hybrid blockchain run.
- They might be vulnerable to issues of censorship or manipulation.
Consortium Blockchain
Consortium blockchains are also known as federated blockchains. This type of blockchain focuses on solving the issues of a single authority controlling the blockchain network. Multiple organizations are allowed to manage and control the blockchain.
Advantages
- One of the benefits offered by consortium blockchain is that it accelerates a much faster verification process making it easier for the organization.
- Multiple organizations can the blockchain as a decentralized system giving each of them equal power.
Limitations
- Only organizations have access to the blockchain while it is not open to the public.
- Since multiple organizations are involved, there might be cases of difference of interest thus affecting the efficiency of the blockchain network.
The Bottom Line
Blockchain technology has become an efficient tool for many industries. The different types of blockchains are used in various industries for various purposes and needs. Organizations and businesses should be aware of their needs and resources and choose the blockchain network accordingly.
